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Record Shorts Backfire in Australia

RBA signals that two years of interest-rate cuts, and push toward weaker currency, are at an end.

By Candice Zachariahs, Bloomberg, Kristine Aquino, Bloomberg | Updated on February 04, 2014

Traders who placed record bets against the Australian dollar are ruing their timing, after the central bank signaled two years of interest-rate cuts are at an end and stepped back from efforts to talk down the currency.

The Aussie traded at 89.10 U.S. cents as of 11:20 a.m. in Sydney. It jumped 2 percent yesterday, the biggest one-day gain since June, paring its past year’s drop to 14 percent. Reserve Bank (RBA) Governor Glenn Stevens left the benchmark borrowing cost at a record-low 2.5 percent, favored stable rates, and omitted mention of an “uncomfortably high” exchange rate that was in the previous two policy statements.

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